a). CD Ltd. purchased a Machine seven years ago at a cost of Tk.97,000 which could be used for more five years. The installation charge was Tk.9,000 and estimated scrap value would be Tk. 10,000. The Company now wants to replace the Machine by a new one. Present realizable value of the old one is expected to be Tk.20,000. Determine the amount of Sunk Cost if it is sold now. and Commercial Cost?

b). Mrs. X lives in a rented apartment and pays Tk.65,000 per month as rent. Now she is thinking of buying an apartment of her own. The cost of apartment will be Tk.1,50,00,000. She has a fixed deposit of Tk.80,00,000 with a bank at an interest rate of 12% p.a. subject to a deduction of tax @ 10% at source. Mrs. X is to pay 14% interest p.a. if she takes loan. Calculate the monthly Opportunity Cost of Mrs. X if she buys the apartment.

Answer rating: 100% (QA)

a Sunk cost means the cost that has been already incurred and is irrelevant in decision making In th... View the full answer